The State Bank of India launched the Residential Builder Finance with Buyer Guarantee (RBBG) program on Wednesday, which provides that the lender will reimburse the entire amount if the developer does not deliver the project within the promised deadline. The scheme is only valid if the builder presents a professional certificate.
This regulation can be used for projects in which the maximum home price is up to 2.5 billion rupees. Developers who have successfully complied with the bank’s due diligence requirements can also take advantage of loans ranging from Rs 50 crore to Rs 400 crore under the program.
Given the recent problems facing home buyers in areas like Noida, where builders don’t typically run the project, this is the best initiative that can help these potential buyers regain their confidence in the industry, and certainly it will have enormous success for both the builders and the buyers.
According to statistics, sales in the six major cities, including the Mumbai metropolitan area, the National Capital Region and Bengaluru, decreased 22% in the second half of the year compared to the first six months of 2019. Even if sales rose 5% annually in 2019, the numbers could still grow if the confidence of home buyers is restored.
Efforts to improve the weak real estate sector have been made at several levels. The Indian central government recently announced the establishment of an alternative investment fund (AIF) of 25,000 rupees, designed to provide some relief to developers with unfinished projects to ensure that their projects are delivered on time. Similarly, SBI cut lending rates last month to 7.9% from 8.15% the previous month, which was a very positive response from the market.
First, 10 cities and their projects are to be recorded, which will be expanded later. The project was already initiated with Sunteck Developers from Mumbai for the three upcoming projects in the Mumbai metropolitan region. This regulation will certainly lead to a certain speed of turnover in the real estate sector.
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